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Ringo Starr

once crooned, "You know it won't be easy."

While Ringo was warbling about romance, he could just as easily have been talking about investing in the world's most populous nation in the wake of Wednesday's vote in the U.S.

House of Representatives

. The vote granted permanent normal trade relations (PNTR) to China, a status that will help integrate the huge nation into the global trading architecture. The increased trade that is expected to result from the major opening of China's markets will lead to greater economic growth and increased revenue for a number of both Chinese and U.S. companies. But picking those companies will be trickier than it was a few days ago.

That uncertainty over who would win and who would lose from the deal caused traders in Asia to balk, even though Hong Kong was among the first major markets in the world to react to the long-anticipated vote. The benchmark

Hang Seng

index barely budged, although U.S.-listed Chinese companies moved in after-hours trading.

The overall indifference is in stark contrast to just last summer, when speculation that a deal on China's entry into the

World Trade Organization

, the body that supervises global trade, was imminent triggered stock market rallies in Shanghai and Hong Kong. The rallies really took off once the pact was concluded. Investors snapped up shares in virtually every Chinese company listed in the U.S., most of which are not exactly household names.

China Prosperity International Holdings


, a construction company, rose as high as 32 1/16 from a dollar;

China Resources Development


, a rubber distributor, rose to 25 from 6.

Other, better-known Chinese companies also skyrocketed. Mobile phone company

China Telecom

(CHL) - Get Free Report

rose 145% in the two months following the agreement. And investors loved tech companies, such as Internet play



, which rose a split unadjusted 1200% from a low last summer to a high this past March.

While investors could make the case that all of these companies would benefit from increased economic activity in China, most of the growth in share prices was the result of momentum trading prior to China's expected entry into the WTO. With the congressional vote over and China's admission now a

pro forma

affair, that play has most likely ended.

"My guess is that it was a short-term boost," says Eswar Menon, portfolio manager of the


Loomis Sayles International Equity Fund. "It's over." The fund has 4.5% of its portfolio in Chinese or Hong Kong companies, while the firm's

Emerging Market Fund

invests 11% of its portfolio in China. The fund owns China Telecom, clothing retailer


and telecom equipment seller


(UTSI) - Get Free Report

, among others.

In fact, Chinese markets in Hong Kong and Shanghai, as well as U.S.-listed Chinese companies, were steady following Wednesday's Congressional vote, despite a flurry of movement in after-hours trading immediately following the results. Overall, the shares of U.S.-listed Chinese companies have fared poorly in recent weeks. Chinadotcom has fallen 60% since its peak in March, and China Telecom has tumbled 38% this year, 18% in the last three weeks alone. China Prosperity and China Resources have each fallen roughly 68% since their post-deal highs.

Investors now "have to do more homework" when investing in China, says Menon.

Not that any of these companies are necessarily bad. Some might be winners over the long term, some losers. It's just that investors have to be more careful picking them, especially since some will undoubtedly be hammered by foreign competition.

"Back in August, very few people understood what the

China WTO deal would do," says Yadong Liu, senior analyst at investor advisory firm

Medley Global Advisors

, which advises financial institutions and businesses. "For the Chinese companies, some of them will now face more

competitive pressure."

Here's where it gets tricky. For example, will China Telecom, which will lose its monopoly position, suffer? Or will it survive and remain a major player, strengthened by new partnerships with foreign firms? Until China is actually in the WTO and the market openings occur, it will be difficult to predict.

Thus, for the time being, investors who want to play China are wise to go the mutual-fund rout, either through China-only funds or regional Asian funds. In addition to the funds mentioned in

Ilana Polyak's

piece on Wednesday, investors can also pick from five closed-end China funds.

They are: the

China Fund

(CHN) - Get Free Report

, down 19% for the year; the

Greater China Fund


, down 10% for the year; the

Jardine Fleming China Region Fund


, down 16%; the

Templeton China World Fund


, down 14.5%; and the

Templeton Dragon Fund

(TDF) - Get Free Report

, down 23%.

Despite their recent poor performances, these are probably good investments over the long term as China grows as a result of increased trade.

Although investing in China is never an easy prospect and has now gotten murkier, there may be good news around the corner. Medley's Liu just returned from a trip to China where he found investment banks being a lot more careful preparing the public offerings in the U.S. for Chinese companies.

"The investment banks have to think of the stomach investors have here" for new offerings in the current anti-IPO mentality, says Liu. "As a result, the underwriting process has been a lot more selective." Thus, the companies that get to do an IPO -- Internet plays




are expected in the next few months -- as well as some banks, will be pretty sound companies, with sensible pricings.

We may have seen a preview of that with the mid-April offering of Hong Kong-based Chinese Internet portal

(SINA) - Get Free Report

. It was one of the rare successful IPOs this year, doubling in the weeks following its offering. However, it experienced a selloff after Wednesday's vote, dropping 17% on Thursday. (Modesty should forbid me from noting that I

forecast the selloff last week. But what the heck?)

Over the next few months, it will get harder to figure out the winners from the losers when it comes to investing in China.

David Kurapka's Global Portfolio column appears Wednesdays and Fridays on TSC. In keeping with TSC's editorial policy, he does not own shares in any companies or mutual funds mentioned in this column. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at